The first chapter seeks to provide answers to a very fundamental question for second generation biofuels: “How much crop residue can farmers harvest from their fields for sale to cellulosic ethanol companies without affecting current levels of production?” The model developed is applied to 101 counties from four Midwestern states in the United States (Colorado, Iowa, Nebraska and Wyoming). Results show that soil organic matter significantly contributes to explaining changes in technical efficiency and total factor productivity. Furthermore, average crop residue harvest potentials were 33%, 53%, 35% and 8% in Colorado, Iowa, Nebraska and Wyoming respectively.

The second chapter analyzes the market and welfare effects of foreign biofuel investments in Sierra Leone. A log-linear comparative static displacement model was used to carry out the analysis and a 30% demand shock was introduced into the system to represent an increase in biofuel demand. Results revealed large welfare enhancing gains for consumers of inedible biofuels but resulted in welfare losses in the staples and edible biofuel consumer markets. Producers generally reported welfare gains by virtue of owning factor inputs (land and other). Equilibrium quantities of inedible biofuels, edible biofuels and food increased by about 8.8%, decreased by 0.22% and increased by 0.6% respectively. Prices for both inputs and outputs increased while quantities of inputs also increased.

The third chapter determines the degree of responsiveness of farm energy input prices and corn prices to changes in crude oil prices using time series techniques. An Error Correction Model (ECM) and a VAR (vector autoregressive model) was fitted. The VAR was used to deduced variance decompositions for the six variables considered (prices of crude oil, diesel, gasoline, natural gas, electricity and corn) to determine the various contributions to the respective error variances. Results showed that the variables converged to a long run stable equilibrium. The strongest relationship was estimated for crude oil prices and diesel and gasoline prices. Prices for natural gas, electricity and corn had small and negative association with crude oil prices.

Advisor: Lilyan Fulginiti.

Previous research on water trading has focused on surface water trading and theoretical approaches to analyzing groundwater trading. Empirical analysis of groundwater trading is a relatively new area of study due in part to the previous lack of recorded usage, trade data and binding constraints on groundwater use by landowners. Results from this research indicate a strong desire to participate in trades, but high transactions costs have limited the number of trades that have occurred. Utilizing empirical models improves the accuracy of predicting trade participation and direction, and therefore the accuracy of models of trade effects on water supplies and stream flows used in policy and decision making.

Adviser: Karina Schoengold

Stochastic simulation utilizing eight representative farms across Nebraska allows for the analysis of risk management strategies. Attributes of these farms reflect the average size, productivity, and variability, expressed by operations across the eight National Agricultural Statistical Districts of the state. Also, the simulation of national, state, district, and county yields or prices are generated for the necessary parameters in the evaluation of various programs or products.

Conclusion drawn from these simulations indicate the optimal risk management strategy for a region of Nebraska, given a set of feasible prices and base 2011 yield and price parameters. Current program participation and product utilization rates indicate strategies employed by the majority of producers in the state do not sway far from these simulated outcomes. Participating in higher levels of revenue protection crop insurance, direct and counter-cyclical government programs, and using a short futures hedge when marketing grain provided the greatest level of revenue protection subject to a producer’s risk preference. Findings may change substantially dependent upon different price, yield, or guarantee levels.

Advisor: Bradley D. Lubben

The average TFP growth rates of the regions have increased over the period of 1976 to 2006. Belize, Costa Rica, Cuba, Honduras and Panama score the highest growth rates while the Dominican Republic, Haiti, and Trinidad&Tobago show slower, and in some specifications, negative TFP growth rates. When the implication of CO₂ emissions from land use change was tested, the trend of EAP evolution declined between 1992 and 2006. According to this result, Haiti is no longer a major concern while Puerto Rico is the worst performer of all.

Advisers: Raymond J. Supalla and Derrel L. Martin

Annual beef cow budgets were created based on typical Nebraska Sandhills conditions. Revenues and costs in these budgets vary according to different classes and age of cattle and replacement strategy. Cash flows are then projected for five years to compare the replacement alternatives. Five-year averages from 2006-2010, as well as an additional analysis that used Winter 2010/2011 prices, were used to determine the cash flow values.

The Total 5-year Discounted Cash Flow values showed unprofitable levels in the cow-calf industry based on five-year averages whereas the Winter 2010/2011 price data resulted in profits. Based on the Total 5-year Discounted Cash Flow values using five-year averages, the replacement alternative of purchasing cows surfaced as the highest return. Retaining heifers was the highest return replacement alternative when Winter 2011 prices were used. Keeping the non-pregnant cow alternative did not prove to be the highest return alternative in either price data used. However, it was not the lowest return either.

Different replacement alternatives become attractive at different cull cow values. Lower cull cow values created higher cash flow values when keeping a non-pregnant cow, whereas extremely valuable cull cows negated this alternative. Furthermore, Winter 2011 prices suggested that keeping a non-pregnant cow was a more feasible alternative than that of purchasing a bred heifer.

Advisor: Darrell R. Mark

We run simulations in a spreadsheet model to derive further insights about key parameters, including the risk aversion coefficients, the spot market price variance, the coefficient of expectations, and the bargaining power weights in the contract market. We observe that when the spot market price is expected to be higher than the equilibrium fixed contract price, increases in the producer’s coefficient of risk aversion cause their optimal share of cattle marketed through contracts to increase and hence it contributes to a higher spot market price. On the other hand, when the expected market price is lower than the equilibrium contracted price, increases in the producer’s coefficient of risk aversion decreases the producers’ optimal share of cattle marketed through contracts relative to the processors’ and hence contributes to lower spot market prices. These two results are due to the fact that increasing risk aversion decreases the sensitivity with which optimal portfolios react to changes in the price parameters. By simulating increasing (decreasing) spot market price variance, we observe the equilibrium contracted proportions to increase (decrease) accordingly. In turn, this causes a lower (higher) spot market price. The simulations on the degree of the processors’ bargaining power in the contract market show that increases in the processors’ bargaining power induces higher demand for contracts by processors and lower supply of contracts by producers. This results in a decline in the contract price and an increase in the spot market price.

Finally, a brief exercise in a dynamic decision making reveals that a producer will always choose to contract out a proportion of their cattle as long as they are less than 50% certain that, on average, future market prices will be slightly lower than the offered contract price.

Advisors: Azzeddine Azzam and Karina Schoengold

Chapter 1 yields two important results. First, while effective in reducing pollution, energy efficiency policies may fall short in protecting future generations from resource depletion. Second, deployment of technologies that increase the ease with which capital can substitute for energy may enhance the ability of societies to sustain consumption and achieve intertemporal equity.

Results in Chapter 1 imply that technologies more intensive in capital and materials and less intensive in carbon such as corn ethanol may be effective in enhancing intertemporal equity. However the effectiveness of corn ethanol (relative to other technologies) in reducing emissions will depend upon the environmental performance of the industry. Chapter 2 measures environmental efficiency of ethanol plants, identifies ways to enhance performance, and calculates the cost of such improvements based on a survey of ethanol plants in the US. Results show that plants may be able to increase profits and reduce emissions simultaneously rendering the ethanol industry more effective in tackling efficiency.

Finally while cap and trade proposals are designed to correcting a market failure by reducing pollution, allocation of emission allowances may affect income distribution and, hence, intra-temporal equity. Chapter 3 proves that under plausible conditions on preferences and technology increasing efficiency requires greater transfers to low income households the higher the effect of these transfers on the price of permits and the lower their effect on the price of consumption goods. This denotes market conditions under which efficiency and equity are complementary goals.

Adviser: Lilyan E. Fulginiti

First, a choice experiment is developed to investigate the patentee’s objective when licensing her innovation, by examining whether, when the decision to license is made, the patentee maximizes profits or her strategy is to maintain a dominant market position by controlling the largest market share. The results show that the assumptions of profit maximization and licensing to weak competitors in an effort to leave strong competitors out of the market are not always true. Rather the innovator’s incentives concerning patent licensing depend on the market structure and the innovator’s beliefs regarding existing rivals.

A second interactive experiment is developed to investigate the effects of the breadth of patent protection and the cost structure of a potential licensee on an innovator’s decision to license her patent and to litigate under infringement as well as on the likelihood of a patent challenge under six different market conditions. The likelihood of licensing occurrence is affected by the patent breadth and the nature of the potential entrant under specific market conditions. The likelihood of an innovator making the decision to offer a license is found to be greater with broad patents regardless of the type of the potential entrant. The likelihood of patent challenge is found to be greater with a broad rather than a narrow patent and when no licensing offer is made by either the patentee or the potential entrant. Also, a weak rival is more likely to challenge a patent than a strong rival. Finally, the likelihood of an innovator invoking an infringement trial is greater when she holds a narrow patent, as suggested in the patent litigation literature, and when she faces a strong rival.

This study utilized gilt development and market pig production data from biological studies that included a 2x2 factorial arrangement of half-sibling maternal lines (LWxLR and L45X) entering two gilt development programs. In one program, gilts were fed on an ad libitum basis. In the other, gilts were restricted to 75% of ad libitum energy intake from approximately 123 days of age until breeding (approximately 226 days of age).

The gilt development data were analyzed in an enterprise budget in both a deterministic analysis where 2004 through 2006 average prices were used and in a stochastic experiment where a simulation engine was used to generate price data with the same correlations and means as historical prices.

In both genetic lines, energy-restricted gilts had a greater probability of reproductive success than ad libitum gilts. Results from the budget showed both LWxLR and L45X energy-restricted progeny generated greater profits than ad libitum offspring. Restricted LWxLR market pigs had a lower breakeven selling price than ad libitum LWxLR progeny ($38.12/cwt restricted vs. $38.60/cwt ad libitum) while ad libitum L45X progeny had a lower breakeven selling price than restricted L45X offspring ($38.07/cwt ad libitum vs. $38.21/cwt restricted).

In the stochastic simulation, both LWxLR and L45X restricted progeny generated greater profits than their ad libitum counterparts in 93.7% and 79.2% of the iterations, respectively. Restricted LWxLR market pigs had lower breakeven selling prices than ad libitum LWxLR market pigs at all iterations while ad libitum L45X progeny had lower breakeven selling prices than restricted L45X progeny in 89.7% of the iterations of the simulation experiment.